In 2007 Rio Tinto's new CEO Albanese got a bidding war with Vale and Alcoa and ended up paying a 65% premium for Alcan.

Dick Evans, former CEO of Alcan, says in the WSJ that the decision to buy was the ". . . worst decisions ever, the largest metals and mining transaction in the history of the world at the high point in the commodity cycle."

What made the decision so bad?

Rio Tinto (ASX, LON, NYSE:RIO) bought at the peak of the aluminum cycle.

Rio Tinto got into a bidding war for Alcan.

China entered the aluminum industry in a big way, flooding the market with cheap metal.

The financial crisis was right around the corner, a great time to have cash on hand but Rio Tinto was now tapped. The company was now focussed on managing debt rather than making deals.